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To : deanna 

From: (Brewster Kahle) 

Subject: print and save 



X-Attachments : 

>Date: Fri, 22 Dec 1995 17:21:17 -0500 


>To : Brewster@wais . com 

>Subject: Letter 


> Confidential 



>Mr. Brewster Kahle 
>WAIS, Inc. 
>690 5th Street 

>San Francisco, CA 94107-1517 



>Dear Brewster: 

>This is to confirm our agreement regarding the transfer of the WAIS, Inc. 

>(iWAISi) software business to a new company you will be establishing, and 

>the arrangements we have made regarding America Online Inc. is (iAOLi or the 

>iCompanyi) interest in, and your employment by, that new company. 



>Severance Terms and Conditions: 

>I. New Corporation 

> A. The Company consents to your formation of a new corporation, the 
>principal business of which will be (i) commercializing the existing WAIS 
>software technology and (ii) providing support and maintenance services 
>under all of the existing (as well as any future) maintenance and support 
>service contracts (iNewcoi) and to the employment by Newco of up to four 

>employees currently employed by the Company, , , , and 

> , subject to and conditioned on the performance of your obligations 

>under this Letter Agreement. 


> B. All of the authorized capital stock of Newco will be issued or reserved 
>as follows: 34% to you, 33% expressly reserved for issuance under an employee 
>stock option plan, and 19.9% to be issued to AOL upon formation of Newco and 
>13.1% to be reserved for issuance to AOL pursuant to AOLis option to acquire 

>up to 13.1% in the future at a nominal price. 

> C. You will cause Newco to authorize AOL to designate one person to the 
>Board of Directors of Newco, for the duration of the period that AOL 
>continues to hold not less than 60% of aforesaid stock or option to acquire 
>stock in Newco. 


> D. You hereby assume all current and future obligations and liabilities 
>under each maintenance and support contract to which WAIS is currently a 
>party, or for which WAIS is in any manner obligated, including but not 
>limited to the existing contract with the White House, and the contracts with 

> To the extent that any such 

>contract is not assignable you hereby indemnify AOL, its employees, officers, 
>directors and other representatives for all such obligations and liabilities 

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>which AOL, using commercially reasonable efforts, is not able to divest or 
>settle for less than $1,000 within six months of the date hereof. Upon the 
>date of their employment by Newco, you will assume all liabilities with 
>regard to any obligations accrued after such date to the up to 4 employees to 
>be hired pursuant to Section IA above. 

>II. Software 

> A. The Company agrees to transfer to you its right, title and interest in 
>and to all existing proprietary WAIS software, provided that you grant to AOL 
>a fully paid, world wide, perpetual, and unrestricted license to the same 
>such software, including all enhancements, modifications, upgrades, and 
functional equivalents, and the unrestricted right to sublicense and 
distribute the same, and you hereby so grant the foregoing to AOL effective 
>as of the same date AOL grants and delivers to you the source code and 
>related documentation to consummate the above described transfer. 

> B. The Company acknowledges and agrees that it has no rights and will claim 
>no right, title or interest in software or any other product developed by 

>Newco after the date of the closing of the Newco transaction contemplated by 
>this letter, without limiting or forfeiting any of the Companyis above 
>described license to use any WAIS software. With respect to products or 
>services offered by Newco in the future, AOL shall be entitled to most 
>favored customer treatment on all matters including price and availability of 
>services . 

>III. Non-Compete 

> A. That certain Non-Competition and Non-Solicitation Agreement entered into 
>by and between AOL, WAIS (formerly known as AOL Acquisition Corp.) and you as 

>of May 23, 1995 (the iNon-Compete Agreement!), a copy of which is attached 
>hereto, remains in full force and effect, subject to the following 
provisions. The parties hereby agree that the Non-Compete Agreement is 
>amended by (i) AOLis agreement to allow you to conduct the business of Newco 
>as contemplated in this Letter Agreement and (ii) any exception to the 
>Non-Compete Agreement subsequently agreed to in writing by AOL pursuant to 
>the process set forth below in this Letter Agreement, and that in the event 
>of a conflict between the provisions of the Non-Compete Agreement and the 
provisions of this Letter Agreement the provisions of this Letter Agreement 
>shall prevail. 

> B. You will provide AOL with written notice of not less than thirty days, 
>prior to any action by you or Newco which would otherwise constitute a 
>violation of the Non-Compete Agreement but for this Letter Agreement. In the 
>event that AOL, in its reasonable discretion, decides to waive the violation 

>of the Non-Compete Agreement, it will so notify you in writing not more than 
>f if teen days after receiving such notice from you. Reasonable discretion, as 
>used herein, shall include, without limitation, consideration of whether AOL 
>or its affiliates would likely incur substantial economic injury or damage to 
>its reputation as a result of your competitive conduct. In the event that AOL 
>elects not to waive the violation, it shall so notify you within such fifteen 
>day period, and its decision shall be final, and you hereby agree not to 
>contest or dispute such decision in any way whatsoever. 

>IV. Stock Options 

> A. Notwithstanding any agreement you have with AOL regarding stock options, 
>which is hereby amended as follows, or the terms of AOLis 1992 Employee 
>Director and Consultant Stock Plan (the 11992 Plani) to the contrary, AOL 
>hereby agrees that 25% of the total number of your AOL options would 
>otherwise have vested over a four year period but for your termination of 
>employment shall vest on May 23, 1996 , pursuant to and in consideration for 

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>a Consultant Agreement which you agree to enter into with AOL, which shall 
>provide that you will make available to AOL reasonable consulting services 
>within your area of expertise until May 23, 1996- . All other AOL options 
>which were granted to you hereby lapse. 

> B. With respect to the four AOL employees you are taking with you to Newco, 

>AOL hereby agrees to continue the vesting of all AOL stock options granted to 
>such employees under the 1992 Plan until May 23, 1996, provided that such 
>employees enter into a Consultant Agreement similar to the one you will enter 
>into requiring them to render consulting services to AOL until such vesting 
>date. AOL stock options which would not otherwise vest by May 23, 1996 will 
>lapse upon each such employees! termination of employment with AOL. 

>In consideration for the terms described above, you agree: 

>(i) Not to do or say anything to criticize or damage the reputation of the 

>Company, or to harm the Companyis management or normal, ongoing business 
operations unless required to give testimony during legal proceedings. 

>(ii) To release and forever discharge the Company, and any affiliated or 
>successor corporation or other entity, and all of their officers, directors 
>and employees (collectively, the lAffiliated Companies!) from any and all 
>losses, expenses, claims, rights and entitlements, whether known or unknown, 
>that you have now or may later claim to have had against the Affiliated 
>Companies, including, without limitation, those arising out of your 
>employment or termination of employment with the Company, excluding only your 
>rights to any vested pension benefits. This includes, but is not limited to, 
>any claims for back pay, for reinstatement or for recovery of any losses or 
>other damages to you or your property based on any alleged violation of Title 
>VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et seq 
> (prohibiting discrimination on account of race, sex, color, national origin 
>or religion); the Age Discrimination in Employment Act of 1967, 29 U.S.C. 
>Section 621 et seq (prohibiting discrimination on account of age) ; the 
>Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101 et seq 
> (prohibiting discrimination on account of disabilities); or any similar 
>local, state, or federal laws. 

>(iii) Not to pursue any individual claim against the Affiliated Companies 

> (except for a breach of this Letter Agreement) . You agree not to file a 

>lawsuit in any local, state or federal court or an individual monetary claim 

>with any local, state or federal agency against the Affiliated Companies as a 

>result of your employment or the termination of your employment with the 





>We contemplate entering into a Consulting Agreement, which will reflect the 

>matters described above and contain the typical provisions regarding the 

termination of your employment with AOL, and the necessary documents 

>regarding Newco in the next several weeks. If you have any questions about 

>this Letter Agreement please call me. 




> America Online, Inc. 


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Lennert J. Leader 
Senior Vice President 

> WAIS, Inc. : 




> Michael M. Connors 



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>Brewster Kahle Date 

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